Ghosts of a Shuttered College Follow Weld Back Into Politics
Ohanian Comment: This item was posted before, but Andre Bendavid's comment makes it worthy of a reread. What is particularly heinous about this scam is that it robs from the poor and unskilled, selling a dream. And William Weld washes his hands of any responsibility.
Andre Bendavid CGC, former Andre Bendavid CGC instructor, Comment: There is an untold human dimension, which highlights the greed and inhumanity turned on 4,000 of the most vulnerable people in our society. Decker took in approx $20,000 of government loan money on each 0f these poor unsuspecting students, while strapping these same people(mostly young unsuspecting males) with that debt, just when they were already in bad
shape) and told them that they would be able to repay it back soon after they were making(serious money) after they finished the "college "program". They were sold "the dream" of making "mad money" if they just signed here for the title 4 funding. Basically Decker was screwing the poor students and the Government. These guys got construction-fluff for a trade education. All this so the guys at Decker and Leeds & Weld could make money.
It stinks of human exploitation on the public tab, on a grand scale. Imagine, what'll happen if this guy becomes Governor.
By Sam Dillon and Patrick D. Healy
LOUISVILLE, Ky. - Carlos Urquilla said he felt lucky when he was hired a year ago to be a dean at Decker College here. A former Army lieutenant straight out of law school, Mr. Urquilla liked the way the school sold itself as a place to help poor students learn a trade.
But in his first weeks at the for-profit school, Mr. Urquilla says, he found employees falsifying student attendance records, instructors helping students to cheat and recruiters arranging federal loans for students who could not read.
Mr. Urquilla said he was fired after he complained to superiors. Months later, William F. Weld, then Decker's chief executive officer, who is now seeking the Republican nomination for governor of New York, signed a severance agreement with Mr. Urquilla. Its terms required him to keep quiet about the school, which offered courses in carpentry, electrical work and other trades, but he considers the agreement breached.
Mr. Urquilla, along with several other former Decker officials, have come forward to describe practices during Mr. Weld's 10-month tenure as chief executive that they say they considered improper and possibly illegal. The school closed in October.
A former admissions director has described the routine falsification of federal loan applications. The former head of Decker's online program says he saw systematic recruitment of students with no access to computers for Internet-based courses. A former instructor in Atlanta says administrators routinely shared test answers with students.
And a former instructor in Louisville says that in 2004 - when Mr. Weld was an active board member in Decker's parent company but not yet its chief executive - officials asked him to set up a sham classroom to fool accreditation inspectors.
In two lengthy interviews, Mr. Weld said repeatedly that he never saw evidence of wrongdoing and had not heard the complaints about document falsification or the way the college was handling loan applications. And no one who has stepped forward has said Mr. Weld was told directly of wrongdoing.
The story of Decker College is a cautionary tale about the pitfalls facing commercial colleges as they seek to build profits by recruiting struggling students eligible for financial aid while honoring their obligations as educators and stewards of federal loans.
For Mr. Weld, Decker's lightning growth, and his investment company's minority stake in it, allowed him to keep his hand in the high-profile issue of education after leaving his post as Massachusetts governor. But its overnight collapse is shadowing his run for office, leaving him with the awkward task of explaining what went wrong.
The college spun into crisis after the federal Department of Education restricted its access to student loan funds in June. The department went further and terminated Decker's participation in federal programs on Sept. 30.
In October, the school was raided by 40 federal agents conducting a fraud investigation, and last month it collapsed into bankruptcy, leaving 3,700 students burdened with debts, some as high as $30,000. This week the Education Department said students could apply to have their loans forgiven.
Mr. Weld blames the federal government and a regional accreditation council for Decker's fall, and continues to praise the college's programs. "They had enormous value in empowering a disadvantaged demographic and getting them into the construction industry, where the average wage is 18 bucks an hour," he said.
He said he personally contributed $530,000 to the school to stave off bankruptcy. "I don't think anybody expended more shoe leather in the effort to avoid having the students stranded than I did," he said, "and certainly nobody is more frustrated than I am."
Of Mr. Urquilla, Mr. Weld said, "Actually I liked him; he was kind of ramrod-straight."
He attributed Mr. Urquilla's departure to a "personality conflict" with the provost and a dean. Mr. Weld added, "I would have thought I might have heard" if Mr. Urquilla was saying there were violations of law. He said he did not recall signing the confidentiality agreement with Mr. Urquilla, but added that he did sign a handful in his time there.
Education and Profit
A twisting path took Mr. Weld to Kentucky.
He resigned as Massachusetts governor in 1997, hoping to become ambassador to Mexico. After his nomination foundered, he moved to New York and began working as outside counsel to an equity fund started by Jeffrey Leeds, a financier with whom he shared a love of the novels of Vladimir Nabokov. In January 2001, Mr. Weld became a full partner with Mr. Leeds. According to friends, Mr. Weld was eager to make money and liked the education focus of Mr. Leeds's equity fund, which was investing in schools and training. Its business model was to purchase schools, make them more valuable, and sell them for a profit. In 2000, Leeds paid $140 million to buy Ross University, a medical and veterinary school in the Caribbean, and three years later sold it for $310 million, Mr. Weld said.
A business deal brought Mr. Weld to Louisville in 2002, when Leeds Equity Partners bought a $30 million stake in a chain of truck driving schools, Franklin Career Services, based here.
The schools were run by two brothers, Gerald Woodcox, a lawyer, and Jeffrey Woodcox, an industrial painting contractor. Under their ownership, Franklin's annual revenues had rocketed from $2 million in 1998 to $79 million in 2001.
Leeds gave Mr. Weld one of four seats on Franklin's board, and by 2004 he had begun to work several days a month in Louisville, occasionally socializing with Jeffrey Woodcox. They and their wives dined together at times, and Mr. Woodcox once hired a limousine to take Mr. Weld to an annual Ohio River steamboat race, Mr. Woodcox said.
"Me and him just hit it off," Mr. Woodcox said in one of several interviews.
Just weeks after Leeds invested in Franklin, a finance company that had loaned thousands of Franklin's students tuition money abruptly cut off that lending stream, forcing Franklin to close the trucking schools.
With Franklin in financial crisis in mid-2002, the Woodcoxes purchased Decker College, a small school in Louisville that had taught business skills to working-class women. Under the terms of its investment, Leeds was entitled to a stake in Decker, too.
Franklin had relied entirely on private loans. But Decker was accredited to process loans under Title IV, the $73 billion federal student aid program.
Mr. Weld and the Woodcoxes added carpentry, electrical and other construction trades to Decker's curriculum, creating a 66-week program. It opened a new campus here and others in Jacksonville, Fla., Indianapolis and Atlanta. Students bused to the sites lived in hotels during four weeks of classroom training.
The other year or so of instruction was delivered online, with students returning to Decker for exams. Tuition ranged from $22,000 to $28,000, most of which students obtained from federal aid.
Decker's enrollment exploded.
In January 2005, Mr. Weld became Decker's chief executive, with an annual salary of $700,000.
His role, he said, was "to hire a management staff that could, as we say in the business, take the company to the next level."
He added: "This happens all the time in the private equity business. It wasn't my intention to stay for any long time."
Many former employees and students said that an aggressive sales pitch was part of the mix from the start, especially in the admissions department, down the hall from Mr. Weld's office at Decker headquarters east of Louisville. That was a raucous call center where 100 telemarketers phoned prospective students. Many operators were former bill collectors or car salesmen.
"The idea was, do anything you could to get students into classes, so we could draw federal funds on them," said Sherrie Moore, a former payroll supervisor at Decker. Steve Johnson, a former admissions director, said supervisors and telemarketers referred to students as products. On one occasion, he said, Jeffrey Woodcox walked through the call center, raging about missed recruitment goals and ordering supervisors to fire some salesmen as a warning to others.
"We will ship 100 students to a campus next week, and you will fire five employees today," Mr. Johnson quoted Mr. Woodcox as saying.
Mr. Woodcox denied that he had made the statement, but acknowledged that Decker occasionally fired telemarketers for "missing numbers."
"We were in the business of recruiting students and training students," he said in an interview. "To run a school you have to have students."
One student who was recruited was Darnell McAdams of Vancouver, Wash., whose experiences were similar to those recounted in interviews by half a dozen former students. A year ago, he saw an Internet ad for Decker's electrical program, submitted his phone number and got an immediate call back. "Mr. McAdams, would you like to earn $35 an hour?" the salesman asked. "Decker training can make that possible." Those wages sounded good, as did the $140 per week cash payments offered during the on-site training.
The salesman persuaded him to enroll, to assume loans totaling $14,000, perhaps - it happened so fast that Mr. McAdams is not sure - and to board a bus the next morning for Decker's Atlanta campus.
During his first three weeks there, an instructor lectured from a textbook, Mr. McAdams said, and tests were open-book. "They'd, like, give you the answers," Mr. McAdams said. He said he finally got to handle some electrical conduit and learn a bit about wiring during the final week.
Then he was on a bus home, armed with a list of construction companies where Decker officials said they had recommended him for jobs. "They'd just given me numbers from the phone book," Mr. McAdams said. "I'd call and people would say, 'No, we're not hiring.' " He finally got a job fixing industrial thermostats. "Decker's training was worthless in the job market," he said.
Mr. Woodcox insisted that Decker had successfully placed hundreds of students in jobs. And Mr. Weld said that he had spoken with dozens of students and that most were more than satisfied with Decker. "I've got to tell you, they were thrilled," he said.
As Decker's academic dean, Mr. Urquilla was hired to supervise instructors. In January, touring the campuses, he heard a lot of grumbling. Instructors told him that many students had been roped into a program they had no interest in, he said. He said he found the student hotels to be riotous, with students drinking, smoking marijuana and skipping class.
To maintain truant students' loan eligibility, Mr. Urquilla said the instructors told him, the Atlanta campus director had ordered them to falsify attendance and coursework records.
"I knew that was flat-out illegal," Mr. Urquilla said.
When Mr. Urquilla reported these problems to Decker's provost and general counsel in Louisville, he said, they responded by telling him to obtain from all Atlanta instructors a signed agreement barring them from criticizing the college. Mr. Urquilla refused, he said.
He was not the first Decker official to raise questions. Brian Vandenburg, an electrical instructor in Louisville, spoke out in 2004, saying he had been ordered to put building materials into a classroom to fool state inspectors into believing that Decker was offering construction classes there. Steve Dwinnells, Decker's director of distance education, said in an interview that he complained when he discovered that Decker was recruiting students who had no access to a computer for online courses.
And Ralph Anderson, an instructor in Atlanta, described in an interview practices reported by Mr. Urquilla. Mr. Anderson said that on some 15 occasions he had recommended expelling students for cheating, but had been told, "Louisville says we need to keep them on the books."
In one case, he said, he learned that administrators were mailing tests to a student in jail but certifying that he was attending classes. Mr. Anderson said administrators had also ordered instructors to accommodate illiterate students by reading tests to them.
Decker officials have fought some of these charges, played down others and said still more were never brought to their attention. The college sued Mr. Vandenburg for defamation, and he countersued, saying that he was a persecuted whistleblower. Mr. Weld said he was not aware of any online student who had no access to any computer, although he conceded that for some the only computer may have been at a public library.
Decker's former general counsel, Brett R. Hensley, said he had never heard of a student in jail, but he confirmed receiving reports from Mr. Urquilla about Atlanta. "He sent back a laundry list of problems, teachers helping students on exams, employees wanting raises, some student attendance issues," Mr. Hensley said.
He said he thought that Decker executives had sought to resolve the problems, but could not recall specifics. "We were trying to do it the right way."
Mr. Urquilla found similar problems in Louisville. A student from Chicago had failed 11 exams and confided that he could not read. Mr. Urquilla said that Decker officials had known, but recruited him anyway. Mr. Urquilla said he had urged that the student's tuition be refunded and that a literacy class be found for him. Decker's provost refused, Mr. Urquilla said.
Mr. Urquilla was fired in February. But he was owed $1,100 in travel expenses, and in a phone conversation weeks later with Decker's general counsel, said he was considering talking to a journalist.
This led to negotiations, with the lawyer eventually offering to pay Mr. Urquilla to remain silent, Mr. Urquilla said. Mr. Urquilla provided a copy of an agreement signed by Mr. Weld and dated Aug. 3. It lists "severance" payments of $8,200. Mr. Urquilla said he had received only $1,000 and considered the contract breached.
"Employee agrees not to take any action or make any statement which disparages or criticizes the college, its management, or its practices," the agreement says.
Mr. Weld said he remembered Mr. Urquilla, but did not recall signing the agreement. In a brief telephone interview, the provost, R. L. Barnett, acknowledged that Mr. Urquilla had made complaints, including some involving "attendance issues" but said he had not reported the falsification of records.
By June, the explosion in loan applications from Decker had drawn Washington's attention. Department of Education officials conducted a surprise review at Decker's headquarters.
After the review, the department said it had questions about Decker's handling of student loans and put Decker in "heightened cash monitoring," a status that requires schools to provide extensive documentation for each new loan application. That provoked a cash-flow crisis.
Soon afterward, Decker management learned that F.B.I. agents were questioning employees, Mr. Woodcox said.
David L. Huber, the United States attorney for western Kentucky, declined in an interview to disclose when or how the bureau's investigation had begun.
But one person who says he spoke to the F.B.I. was Mr. Johnson, the admissions officer. He said he saw Decker officials falsify federal loan applications and that he photocopied hundreds of files and delivered them to the F.B.I.
He said he then wore a recording device for the bureau in a meeting with Decker executives. Federal officials have refused to confirm or deny his role.
Mr. Weld remembered being told of the same meeting. He said that he had sent Mr. Hensley and others to interview Mr. Johnson. They reported back that Mr. Johnson's claims could not be substantiated, Mr. Weld said, and that the employee was demanding money to be silent.
Mr. Johnson said that the discussions with Decker ended after he signed an agreement pledging to keep Decker matters confidential, in exchange for payments. He said he never received the payments.
Mr. Weld recalled that he heard one rumor that employees might be doctoring student loan forms. On July 21, he sent a companywide e-mail message, explaining that it was a felony to provide false information to the government and urging employees to report any illegalities to him.
Mr. Weld left the Louisville headquarters in August, though he continued as the school's chief executive through October.
His departure provoked bitterness among some employees, especially because he delegated to subordinates the task of meeting with hundreds of disgruntled workers on Sept. 6 to announce their dismissal. Employees are owed $1.4 million, according to documents filed in bankruptcy court here.
Sherry French, a former senior accountant, said she worked without pay in the days after her layoff to shut down Decker headquarters, and helped box up Mr. Weld's personal effects.
"What we saw was that he threw up his hands, said, 'I'm running for governor,' and vanished," Ms. French said.
On the day of the mass layoff, Mr. Weld stepped down as a principal at Leeds to become an unpaid senior adviser to run for governor full time.
Mr. Weld said he believed employees might not know the lengths he went to save Decker. He said he put $180,000 of his own equity into the school, made it $350,000 in loans and drew only $431,000 of his annual salary before departing.
He said he urged the Education Department to release federal funds for the school. He also battled the Council on Occupational Education, the private Atlanta group responsible for the college's accreditation.
Mr. Weld says that Decker had presented the council with its plans for online education and believed that the accreditation officials had approved them. He said he and other officials were stunned that the council told the Education Department it did not know that most instruction was taking place online.
Mr. Weld worked to convince the Education Department that Decker's online program was valid and had been accredited. But his entreaties failed.
On Sept. 30, the Department of Education announced that it was banning Decker from participation in federal loan programs. It said the college owed Washington $7.2 million.
Decker is now suing the Council on Occupational Education. On Oct. 18, federal agents searched the college's headquarters, trucking away 1,000 cartons of documents. Over the weeks since, federal agents have interviewed "a ton of people," according to Jeffrey Woodcox, including the two Woodcox brothers. Mr. Weld said he had not been interviewed. Federal and state investigations are still under way.
On Oct. 21, the Decker Web site announced that the college would close. "I e-mailed, tried to call them, got voice mail, and then found their number had been disconnected," said Mr. McAdams, the Vancouver student. "They just turned their back."
Mr. Weld differs. "It's a tough situation with the students, you know," he said. "That's a story that's easy to understand. Nobody tried harder to save their investments in those months than I did."
Sam Dillon reported from Louisville for this article and Patrick D. Healy from New York.
Sam Dillon and Patrick D. Healy
New York Times